Volatility in the plastics market

The price of plastic PRNs has risen above historical levels and is expected to remain high for the remainder of 2013.

This is due to restrictions on exported waste being imposed by the Chinese government, along with the increasing UK recycling targets.

2012 saw a significant increase in the price of plastic PRNs: the market began the year at around £10 per tonne, hitting £35 per tonne at its peak. The tightness of the market has continued into 2013 meaning that the cost per tonne has recently reached above £70.

China is a key export destination for the UK's plastic waste stream. However, the Chinese government is enforcing stricter quality requirements to reduce the amount of lower quality waste entering the country. Known as 'Operation Green Fence', this initiative began early in 2013 and is expected to continue at least until December 2013.

The PRN market is controlled by supply and demand; meaning that, if there is oversupply in the market compared with the demand, the price will lower. If there is undersupply in the market compared with demand, the price will rise. With less waste plastic being exported to China for reprocessing, there is a reduction in the amount of PRNs available, causing the price to increase. As a result, the market price jumped from £25 at the beginning of 2013 to around £70 in the last month.

Due to China's influence over the plastic PRN market, we estimate that the effects of Operation Green Fence will continue to impact on the market and therefore cause the plastic PRN market to remain volatile.

In addition to this, the government-set recycling targets for plastic started increasing this year to 37% and are going to be increasing annually, set to reach 57% by 2017. This is only compounding the problem of decreasing supply and increasing demand. Overall, this is likely to affect the cost of collecting recycled material and therefore will also be an influence on the PRN market rates.

With prices expected to fluctuate for the rest of 2013 we are keen to help bring certainty to our members' budgets in an unprecedented year. As a scheme, we have purchased through many volatile markets and continually offered significant savings. We are confident that our purchasing strategy will ensure we achieve compliance, with the aim of purchasing at the low points in the market.

If you would like to discuss the price of PRNs further or would like some advice for the rest of the year, including the option of purchasing your remaining PRNs now; please call us on 0845 094 2228 or emailinfo@ecosurety.com.